Indigenous EDCs exist across a range of industries such as retail, forestry, fisheries, energy, mining, construction and hospitality. They have the potential to be major drivers for economic growth in Indigenous communities.

The role of Indigenous EDCs in the renewable energy sector has so far been unclear. Canada’s energy industry is responsible for 80 per cent of the country’s greenhouse gas emissions. Increasing renewable energy production is an important part of reducing emissions.

Today, Indigenous communities are involved in hundreds of large renewable energy projects and thousands of small ones.

Renewable energy

With support from community members and the band council, an Indigenous community can establish an EDC as a separate for-profit business entity to engage in commercial opportunities on its behalf. As a business, the EDC may enter into partnerships and joint ventures, including owning renewable energy projects. Unlike other businesses, the community’s members are the only shareholder. That means the EDC is responsible to the community and its board of directors.

Our research offers new findings about the role of Indigenous EDCs in supporting the development of renewable energy projects and how this links to socioeconomic benefits for communities.

In partnership with the Canadian Council for Aboriginal Business, we surveyed and interviewed eight representatives of First Nation EDCs with active renewable energy projects. Through online desk research and the survey and interview results, we were able to provide an overview of First Nation communities and EDC involvement in the renewable energy sector.

Indigenous communities can be involved in renewable energy projects in a number of ways. The benefits of revenues can be important to improving communities’ self-determination and economic reconciliation.

Benefits of ownership

In most projects, either the band council or the EDC can be involved in the project’s contractual arrangements. These arrangements correlate to the amount of Indigenous ownership in a project. For example, communities can be equity owners in projects, either as full or partial owners, in which they receive revenues and some control over project decision-making.

When a community has little to no ownership in a project, the governance agreement between the Indigenous community and company developing it is usually a resource revenue or impact and benefit agreement. These types of agreements typically offer less control and economic benefits compared to when a community has meaningful or full ownership shares in a project.

Scholars, and some of our research participants, argue that ownership brings greater benefits to communities than revenue sharing or impact and benefit agreements that tend to be weaker and short-lived.

Although all types of governance and ownership structures will likely provide some form of economic benefits, Indigenous ownership in a renewable energy project offers more control over decision-making and community pride.

Financial risks

According to our analysis, there are at least 294 Indigenous EDCs operating in Canada. In our study, we learned that up to 26 EDCs are involved in 47 solar, wind, biomass and hydroelectric projects that range in size from 0.5 to 230 megawatts. We also found that Indigenous EDCs more often tend to be involved in ownership of projects, such as partnerships and joint ventures, whereas the Band Council is more often involved in political governance structures such as resource-sharing agreements.

Despite the stronger benefits of ownership, our findings show Indigenous communities own few large renewable energy projects. Our interviews confirmed that not every community strives for whole ownership in renewable energy projects. Communities were concerned about the amount of money they’d need to borrow to finance the projects.

Some interviewees pointed out that the financial risk of greater project ownership may be too high for their community to take on. Some Indigenous and business leaders have called for an Indigenous loans guarantee program to ensure their communities can access the capital needed to partner in clean energy infrastructure projects.

Ownership denotes control over a project, which would align with the United Nations Declaration on the Rights of Indigenous People and Indigenous rights to self-determination.

Indigenous EDCs are emerging as important players in renewable energy deployment, as they are involved in ownership of an increasing number of renewable energy projects of a range of sizes. With the right support, more EDCs could be involved in the development of renewable energy projects. This could strengthen Indigenous self-determination and give communities the ability to benefit from and control resource developments on their lands.

Christina Hoika is associate professor of geography and civil cngineering at the University of Victoria. Matthew Foss is vice president research and public policy at the Canadian Council for Aboriginal Business.

Katarina Savic from the consultancy firm Mokwateh co-authored this article and led the research project.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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This year’s negotiations are focused on securing more ambitious carbon-reduction pledges, or nationally determined contributions (NDCs, which must be ratcheted up every five years in line with the Paris Agreement). Earlier this year, Canada increased its NDC to cut emissions 40 to 45% below 2005 levels by 2030, up from the 2016 target of 30% below 2005. Canada’s plan for meeting its more aggressive NDC includes cutting energy waste, pricing carbon and decarbonizing transportation through zero-emissions vehicles, among other initiatives. This should significantly reduce energy demand and waste while boosting electrification of our economy with renewable energy production. However, my research on renewable energy transitions around the world suggests that for this plan to be cost-effective and successful, Canada will need to introduce policies that support the deployment of clusters of complementary low- and no-carbon technologies to the market.

Take Canada’s buildings, which are responsible for a large portion of the country’s emissions. Past building retrofitting efforts of EnerGuide for Houses and ecoEnergy programs provided incentives for multiple innovations, although homeowners tended to favour singular innovations, mainly natural gas furnace replacements. This yielded only about 20 to 30% average reductions of a building’s energy use. On the other hand, deep energy retrofits can achieve energy reductions of 50 to 80% through the clustering of technologies, such as insulation of basements, ceilings and walls; ventilation; and the adoption of new mechanical systems, such as heat pumps and solar panels for electricity and hot water. Clustering these technologies effectively drives down both energy use and costs of implementing building retrofits. 

Sources of renewable energy are often criticized for their lack of predictability. However, combining complementary renewable energy technologies that produce electricity at different times (i.e. the wind is blowing more when the sun is shining less, and vice versa) has been shown to smooth out renewable power production, integrate more renewable power into the grid, and drive down the size and costs of energy storage. Even so, policies to support combining these technologies are not present in Canada. 

Renewable power can be made more reliable by adding other innovations, such as allowing electricity sharing between consumers through “peer to peer trading” and encouraging consumers to change their demand when renewable power production is low or high (known as demand response and load balancing). Clustering renewable energies with these innovations not only improves the reliability of renewable power; it reduces the costs of implementation and provides resilience for local economic development. In addition, using electric cars as back-up power sources in people’s homes can help privatize and distribute some of the costs of the infrastructure support for clusters.

Canada will need to introduce policies that support the deployment of clusters of complementary low- and no-carbon technologies to the market.

While clustering technology effectively improves reliability and drives down both energy use and costs of implementation, in my 13 years of research I have yet to come across any jurisdictions in developed economies that have implemented policies that support the diffusion of complementary renewable energy sources. In Japan, the solar lobby prevented the widespread adoption of wind power that could have complemented solar power. Vietnam has one of the most successful solar energy programs in the world, but its almost exclusive focus on this type of renewable energy has disrupted the reliability of its electricity system.

The European Union is currently rolling out legislation to support the implementation of renewable energy with other innovations like energy storage, peer-to-peer trading and virtual power plants (VPPs are networks of decentralized, medium-scale power-generating units such as wind farms and solar parks). However, this legislation still does not explicitly support the diffusion of complementary renewable energy sources. 

The importance of the widespread adoption of renewable energy in NDCs is underscored again and again at COP26, by academics, environmental advocates, politicians and business leaders alike. The We Mean Business Coalition, which is hosting a pavilion at COP26, is calling for the ambitious goals of ending coal and scaling up renewables now. On November 2, the Global Energy Alliance for People and Planet – which includes the Rockefeller Foundation, IKEA and the World Bank Group – launched a goal of reaching one billion people with renewable power. 

Canada is rightly investing $964 million in smart renewable energy projects, some of which will support VPPs, and this will need to be ramped up to successfully electrify  most of our transportation and energy systems. During September’s federal election campaign, Justin Trudeau’s Liberal Party promised a Dutch-inspired model of deep energy retrofits for buildings. Now is the time to re-examine how our economic and regulatory policies across federal and provincial jurisdictions can move toward supporting complementary low- and no-carbon technologies that can provide reliable, affordable energy to communities while achieving our NDC under the Paris Agreement with confidence. Lobbying and advocacy works, and those pushing for change can call for the rollout of clusters of innovations that support our collective future. 

Christina Hoicka is an associate professor of geography and civil engineering at the University of Victoria. She is attending COP26 as an observer. 

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Although Canada’s elected officials say they’re embracing that urgency, the policies adopted by various levels of government to date haven’t supported the fundamental and rapid transition needed to decarbonize our energy system.

A recent study by my research team at the University of Victoria found that policy documents of successive provincial and federal governments all say they aspire to a low-carbon energy transition. However, many policies intended to drive the low-carbon transition are actually just reinforcing fossil fuels by supporting the wrong kinds of innovations. Our research led us to the conclusion that Canada is locking itself into continued reliance on fossil fuels through policies that encourage incrementalism, rather than the transformative change we need. 

The scorecard tool we developed uses a scale of -2 to +2 to evaluate an innovation’s potential to decarbonize, democratize and decentralize energy systems. Policy-makers and investors can use these scorecards to inform their decisions about which innovations to support and which to discourage. Negative scores mean that the innovation is reinforcing the energy system’s path dependency on fossil fuels. A score of zero means that the innovation is reinforcing the status quo, and a score of +1 means that the innovation is providing incremental shifts toward reducing fossil fuel use, giving consumers more control, for example, by putting solar panels on rooftops. Innovations that receive a score of +1, however, are not transformative enough to address the climate emergency in the short timeframe that we need to. A score of +2 means that the innovation has the potential to disrupt the energy system by replacing fossil fuels, give communities more collective control over energy decisions, and decentralize energy grids.

Our study reached out to hundreds of policy-makers, energy and environment experts and advocates in Ontario to help us identify low-carbon innovations available to energy users. We identified more than 130 innovations offered over the last 20 years, including cooperatively owned solar panels, micro-grids, energy planning in Indigenous communities, electric vehicles, all the way down to replacing natural gas appliances and supplying new housing with natural gas. 

We also identified the policies and stakeholders that support them. We found that innovations with a high potential to decarbonize, such as electric vehicles and zero-carbon buildings, had less uptake. In contrast, the most popular economic policies support innovations that reinforce the fossil fuel regime, such as high-efficiency natural gas furnaces. For instance, Ontario cancelled both its feed-in-tariff program for renewable energy development and its cap and trade program and instead is choosing to expand the natural gas system to serve additional homes. 

We found that having the support of a wide range of stakeholders, such as policy-makers, advocates and industry, facilitates the diffusion of more innovations that disrupt the fossil fuel system. The more public discourse there is to support innovations with greater disruptive potential, the higher the possibility that policies and the instruments that support them will be developed. And if we give communities and municipalities more control over their energy systems, they are better able to deploy renewable energy and other decarbonizing innovations. 

In other words, the best low-carbon innovations decarbonize, democratize and decentralize.

We developed a scorecard tool to evaluate an innovation’s potential to decarbonize. Policy-makers and investors can use these scorecards to inform decisions around which innovations to support and which to discourage.

Canada’s state of carbon lock-in is making it hard to transition. Our policies, infrastructures, technologies and behaviours all reinforce continued fossil fuel use and inhibit the uptake of decarbonizing technologies. Many of the low-cost and commercially viable low-carbon innovations required to meet crucial greenhouse-gas-reduction targets already exist yet are being implemented much too slowly. Only four of these – solar PV, energy efficient lighting, data centres and networks, and electric vehicles – are penetrating markets sufficiently, according to the Organisation for Economic Co-operation and Development (OECD).

A low-carbon energy transition means switching things such as heating and transportation to run on electricity rather than fossil fuels, combined with rapid and massive deployment of low-carbon sources of renewable energy. It also requires energy users – households, businesses and even public institutions – to participate in energy systems in many new ways, such as putting solar panels on their roofs or driving electric vehicles. Collectively, by adopting innovations that decarbonize, democratize and decentralize at a large market share, energy users can disrupt the energy system to propel us toward a net-zero world. 

As a Liberal minority government is sworn in in the coming weeks, it will quickly need to ramp up its greenhouse-gas-cutting policies, with the UN’s landmark climate change summit in Glasgow, COP26, rapidly approaching. Canada needs its policy-makers to respond to the climate crisis by focusing their efforts on the wide range of innovations we can harness to decarbonize our economy. But they must also take care that policies don’t work against the goal of a fossil-free transition for Canada.

Christina Hoicka is an associate professor in geography and civil engineering at the University of Victoria.

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